over/under applied oh

Project Description:

1. dynamic designs, inc. has developed a new design to produce track shoes tht are used in cross-country races. the company’s shoe design is innovative in that the insole is made of a product that provides a greater cushion and adapts more easily to a runner’s foot. management estimates expected annual capacity to be 80,000 units; overhead is applied using expected annual capacity. the company’s cost accountant predicts the following current year activities and related costs:

other than any possible under- or overapplied fixed overhead, management expects no variances from the previous manufacturing costs. under- or overapplied fixed overhead is to be written off to cost of goods sold.